Economic Growth | Notes
What is the difference between real and nominal?
Real - adjusted for inflation
Nominal - not adjusted for inflation
What does per capita mean?
per person (divide by the population)
What is real GDP?
The total value of goods and services produced in the UK economy
What is (actual) economic growth?
An increase in real GDP
What is potential economic growth?
An increase in the productive potential of an economy
What are the four stages of the economic cycle?
- boom: high economic growth, low unemployment, high inflation
- downturn
- recession: negative economic growth, high unemployment, deflation
- recovery
What is a positive output gap?
When economic growth is faster than the trend rate of growth
- fast economic growth
- very low unemployment
- high inflation
What is a negative output gap?
When economic growth is slower than the trend rate of growth
- slow economic growth
- low inflation
- high unemployment
Summary questions
- What is the difference between real and nominal?
- What does per capita mean?
- What is real GDP?
- What is economic growth?
- What is potential growth?
- Stages of the economic cycle
- What is a positive output gap?
- What is a negative output gap?